Medical Practices Cut Operating Expenditures

Medical practices cut operating expenses by more than 2% as the health care industry braces for the 29% cut to Medicare payments.

General operating expenditures for medical practices were cut by 2% last year, according to a study by the Medical Group Management Association. The decrease in spending in 2010 follows nearly a decade where general operating expenditures had increased by more than 50% since 2001.

Cost Survey for Multispecialty Practices: 2011 Report Based on 2010 Data

MGMA is speculating that the health care industry is bracing for the 29% cut to Medicare payments. The revealed that by monitoring operating expenses, total medical revenue among the practices surveyed increased by 8.5% since 2009. Since 2010, spending on furniture and equipment decreased by 23.37%. And while drug supply costs are down 8.5%, medical practices increased spending for total support staff by almost 5% and medical and surgical supplies by 7.5%.

According to MGMA President and Chief Executive Officer William F. Jessee, MD, FACMPE, the findings suggest physicians are being more conservative. However, he said that spending less isn’t necessarily a good thing.

“In an effort to reinforce themselves against a draconian proposed cut to Medicare payments, as well as other factors, they have worked to reduce operating expenses, and renegotiate rates with vendors, supply companies and insurance carriers,” he said in a statement. “There is only so much more practices can do to cut expenditures without inhibiting their ability to run a successful, innovative practice.”

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